The Lost Cycle By Eric S. Hadik

And the rain was upon the earth forty days and forty nights…and the flood was forty days upon the earth. (Genesis 7:12, 17a) And Moses was in the mount forty days and forty nights. (Exodus 24: 18b) And he was there with the Lord forty days and forty nights. (Exodus 34:28a) And forty days were fulfilled for him; for so are fulfilled the days of those who are embalmed. (Genesis 50:3a) And they returned from searching of the land after forty days. (Numbers 13:25) And the Philistine (Goliath) drew near morning and evening, and presented himself forty days. (I Samuel 17:16) And when He (JESUS) had fasted forty days and forty nights, he was afterward hungry. (Matthew 4:2) And He was there in the wilderness forty days tested by Satan. (Mark 1:1 3a).

One of the most prominent and significant time frames throughout the Bible is the cycle of forty days, or more often than not forty days and forty nights. The preceding verses are but a few of the numerous passages, within the Bible, which emphasize the importance of this unique period of time. It’s appearance spans all of written history, not just that of the Word, from the embalming practices of the ancient Egyptians and Israelites to the life of Jesus and on through to the modern day observation of Lent, the forty day period from Ash Wednesday to Easter Sunday observed by Catholics worldwide. It is also recorded that Jesus remained on Earth for forty days after His resurrection before ascending into Heaven.

The significance of this, from a trader’s perspective, is realized when this cycle is applied to market action and used in tandem with other cycle and wave analysis for increased accuracy in trading.

It is very surprising that most Gann students choose to ignore this cycle, proven time and again throughout history, and instead elect to adhere to a forty-five day cycle which so often falls short of their expectations with no apparent explanation. The reason should now be obvious—it is due to the presence of the six-thousand year old, forty day cycle overriding the more popular (though often less effective) forty-five day cycle. So many followers of W.D. Gann also elect to ignore his exhortation to study the Bible, reading it three times before proceeding, instead diving immediately into angles, squares and cycles without the necessary foundation being laid fist. They are neglecting the structure that must fist be developed for a successful trading discipline.

Read Book: Cycles: The Mysterious Forces that Trigger Events

The Bible possesses a vast wealth of knowledge and information and Gann’s advice should be heeded by any student willing to devote the necessary time and effort to become an informed and enlightened trader. Trading should not be a one or two year whim but rather a lifelong endeavor. It is not just the Biblical implications, however, which emphasize the significance of this time frame, but also the numeric and chronological characteristics. A forty, or forty and one-half, day cycle is unique when considered in the following light:

1. 365 days divided by 9 = 40.55 (Why don’t more Gann enthusiasts follow this?)
2. 2 times 40.55 = 81 (9 squared) 3 times 40.55 = 121/122 (11 squared, onethird of a year and only one degree from a very interesting angle)
3. 1932 low in the DJIA = 40.56
4. A six week cycle (the most prevelant in stock index action) measured from the commencing Monday through the culminating Friday encompasses 40 days.

As mentioned in #2, the second and third multiple of this cycle are equally as important when seeking major reversal points in any market. It would be easy to selectively pick supporting charts and include them with this article to reinforce my point but that has never been my approach. I would prefer to outline the forthcoming dates when this cycle is strongest, and therefore most likely to produce dramatic revesals in the indexes. There are currently six time frames apparent which should be viewed for highs and lows.

The low cycles align on:

• l-August 21-24, 1990
• 2-September20-21, 1990
• 3-October 19/22, 1990

The high cycles align on:

• I-October 3/6, 1990
• 2-November 16, 1990
• 3- January 2, 1991

(Yesterday’s invasion of Kuwait by Iraqi forces confirms the decline which is inevitable into the three year anniversary of the infamous Harmonic Convergence and a plethora of other cycles, including the forty day.) The initial low cycle is likely to produce the lows for the year, much like it produced the highs, on the same date, three yeas ago. This cycle should be utilized like any other, considering it not only from market highs and lows, but also from prominent planetary and seasonal dates. (It is interesting to note that yesterday’s invasion came on the forty-fist day since the summer solstice and I will be closely monitoring the events in the Middle East on three subsequent dates-September 11+12 and most accurately on October 22 and December 1-2. The October date should be dramatic since it aligns with the three year anniversary of the crash, a cycle low in the Dow and eighty-fist day since the invasion, which is also the 121st day since the solstice.) These cycles, as well as the Elliott Wave and much of Gann analyses possess a certain level of subjectivity and I continually stress the placement of proper emphasis on any subjective analysis within a structured, disciplined trading approach. Cycles, and the Elliott Wave, are not panaceas but can play an important part and fill a perpetual void in many trading strategies. Entering the markets should be just like entering a business not just a lot of theory, but rather a structured, disciplined and prearranged strategy to participate in and capitalize from their existence. Recognize the strengths and weaknesses of these tools and utilize them accordingly.